Best Unsecured Business Loans for 2021

Best Unsecured Business Loans for 2021

Compare Small Business Loans

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What is an unsecured business loan?

An unsecured business loan allows you to get a loan without any collateral. It’s a tempting loan option because you don’t need to put your business assets on the line to secure funding. However, the lender still needs to be comfortable that you’ll repay your loan. So instead of collateral, the lender may require you to have good personal credit, and your business to have a certain amount of monthly or yearly revenue and time in operation.

Lenders may require a personal guaranty, too — if your business is unable to repay its debt, you would be personally responsible for doing so. Unsecured business loans can also come with higher interest rates to make up for additional lender risk.

Best place to start: SnapCap

Consider this if you want to compare multiple offers at once with a single application.
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Good for

  • Business owners looking to compare multiple lenders at once
  • Businesses that have been in operation for at least one year
  • Large purchases — the borrowing limit is up to $1 million
  • Options for borrowers with bad credit

Bad for

  • Business owners looking to work with a specific lender
  • Businesses that don’t meet revenue requirements

Why we like it: SnapCap makes it easy to shop for an unsecured business loan. SnapCap’s marketplace allows you to see loan options from multiple lenders via one application. The process can save you time and effort by matching you with different lenders based on your credit score, time in business and revenue. Borrowers need to meet minimum criteria of $100,000 in revenue and at least one year in business. Plus, you may be able to find lenders who accept credit scores as low as 500.

Drawbacks: While the SnapCap application process makes things simple, you’ll need to assess the lenders carefully. Not all lenders in the SnapCap network provide unsecured loans, so review each lender’s offer carefully. SnapCap also has a large network of lending partners, but it’s not exhaustive; some lenders may not be available on the platform.


Best unsecured loans for bad credit: Credibly

Consider this if you want larger financing and also have an excellent credit score above 680.
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Good for

  • Borrowers with credit scores in the 500s
  • Loan needs up to $400,000
  • Businesses in operation for less than a year but more than six months

Bad for

  • Businesses with less than $15,000 in revenue per month
  • Startups that are less than six months old

Why we like it: Credibly is a good loan option for business owners with personal credit scores in the 500s. It offers multiple unsecured loan options, including working capital and merchant cash advances, so you can find the loan type that works best for your business needs. The process for getting your funds is fast — approval may happen within 24 hours and funding could be received in the same day.

Drawbacks: Your business needs to show an average of $15,000 per month in deposits to be eligible for a loan. For working capital loans, you need to have been in business for at least six months. If you’re applying for a business expansion loan, the time-in-business requirement is three or more years.


Best unsecured loans for large purchases: BFS Capital

Consider this if you need a short-term business loan and have a minimum personal credit score of 600.
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Good for

  • Businesses that need financing quickly
  • Financing large purchases

Bad for

  • Businesses that don’t meet the revenue requirements of $25,000 per month
  • Companies in operation for less than two years

Why we like it: BFS Capital offers short-term, no-collateral business loans up to $750,000, with six- to 18-month terms. Its loan offerings are available for businesses in operation for more than two years that earn at least $25,000 per month in revenue. Financing can happen quickly, with loan approval as soon as 24 hours and funding within one to three days (for loans of $100,000 or less).

Drawbacks: Most lenders that offer unsecured loans require borrowers to meet a revenue requirement. However, BFS Capital’s monthly revenue requirement is steep at $25,000 per month in average monthly revenue, which may not work if you’ve got a new business or struggle to generate profit.


Best unsecured loans for medium purchases: Balboa Capital

Consider this if you want funds to make medium business purchases without putting up collateral.
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Good for

  • Businesses needing a small loan — the minimum loan size is $5,000
  • Businesses with annual revenue of more than $300,000
  • Fast online approval process

Bad for

  • Businesses that need to borrow more than $250,000
  • Companies that earn less than $300,000 per year in revenue

Why we like it: Balboa Capital is a good financing option for businesses that need to borrow up to $250,000. Loan terms run from three to 18 months. The lender requires one year in business to qualify, and, if you apply on a weekday, you’ll generally have a decision on your loan application the same day you apply. Balboa will consider applicants with lower credit scores, too.

Drawbacks: You might not be able to meet all of your loan needs with Balboa. Of all the lenders on this list, it offers the lowest maximum loan amount, at $250,000. That might work with your business needs, but if you think that you may need to borrow more, you’ll need to find another lender.


Methodology: How we Chose the Top Options

Comparing small business loans is often a difficult task. Several variables come into play: For example, one loan might offer a large loan amount, but also require significant monthly revenue. When you’re looking for business financing, take into consideration all of the different factors that will affect your decision, including:

Loan Size: Estimating how much you need to borrow will help narrow down the ideal lender. Some lenders may offer higher limits than others and you don’t want to work with a lender that can’t meet your full lending needs. Spend time getting a good estimate of how much you need to borrow so you can narrow down your choices.

Minimum Requirements: Understanding and meeting a lender’s specific minimum eligibility requirements before you apply is important. Most lenders will have minimum FICO Score requirements, minimum monthly revenue requirements and requirements for how long you’ve been in business. Knowing these requirements upfront can save you time during the search process to find the right lender.

Speed of Funding: How quickly do you need your money? While most lenders that offer unsecured business loans do have a fast financing process, you’ll want to make sure that the money is available as quickly as you need it to be.

Erica Gellerman is a CPA and received her MBA from Duke University. Her education, experience working in both financial services and small business consulting, and paying off $120,000 in student loans (ahead of schedule!) helps inform her writing now on topics related to both student loans and small businesses. As a freelance writer for the past five years in the personal finance and small business space, her work has been featured in publications like Forbes, Business Insider, and Money.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.